Letter to Chairman William Kovacic, Federal Trade Commission

Letter

Higgins Seeks Answers: Why are Western New Yorkers Paying More at the Pump?

Congressman Brian Higgins (NY-27) today sent a letter to Federal Trade Commission (FTC) Chairman William Kovacic asking that the FTC investigate the causes behind the price discrepancy between the prices of gasoline in Western New York versus the prices in rest of New York State. The average retail price of gasoline in the Buffalo area today -- $3.40 per gallon -- is $.08 more than the nearby community of Rochester, and $.36 and $.38 more than the upstate communities of Syracuse and Albany, respectively (see chart below). The average price of gasoline in Jamestown is $3.37.

"This is a significant price difference for families in Western New York who have been hit hard enough in these tough economic times," said Higgins. "Families are spread too thin to be paying more than necessary to fill their tanks. We need to get to the bottom of what is causing the price of gas is Western New York to be so much higher than that of its neighboring communities."

Higgins asks that the FTC investigate theories on possible causes that have been issued concerning the relative distance to oil refineries, differing local taxes and fees, and the level of local retail competition.

"An investigation will help inform my colleagues and me of the best course of action to take to address gas prices and ensure Western New Yorkers are getting a fair deal," Higgins said.

The full text of the letter is below:

October 21, 2008

The Honorable William Kovacic
Chairman, Federal Trade Commission
600 Pennsylvania Ave, Suite 444
Washington DC, 20580

Chairman Kovacic:

I am writing to express my concern about the price of gasoline in Western New York relative to other comparable areas of upstate New York.

Western New York suffers from a weak regional economy relative to most of the nation, and has a disproportionate number of residents on moderate or fixed incomes. Most economists and experts conclude that we are in the beginning stages of a protracted economic recession. While the recession is expected to get much worse, its impacts are already being felt by the Western New York families I represent.

Congress is doing what it can to avert economic disaster by passing legislation to stabilize the credit markets and by laying the groundwork for strengthening the regulation of the financial sector to increase transparency and oversight. We are also working to combat unemployment and economic contraction through the consideration of a stimulus package that will extend unemployment benefits and put people to work on much needed infrastructure projects that will also serve as investments to help our region and our country grow.

That said, both the legislative and executive branches of the federal government must remain especially vigilant to protect consumers during these difficult times. As you know, the high cost of gasoline has put a strain on family budgets in recent years. This pain has been particularly acute in Western New York which, as mentioned above, suffers from high unemployment and moderate wages. It is of particular concern that the retail price of gasoline in the Buffalo area today -- $3.40 per gallon -- is $.08 more than the nearby community of Rochester, and $.36 and $.38 more than the upstate communities of Syracuse and Albany, respectively.

Given this disturbing information, I respectfully request that you investigate this matter to determine the causes for this discrepancy. Theories have been issued concerning the relative distance to oil refineries, differing local taxes and fees, and the level of local retail competition. Your investigation into exactly why gasoline costs significantly more in the Buffalo area than it does in other upstate communities will assist me and my colleagues as Congress takes further action on gasoline prices next year, and may uncover cause for the Federal Trade Commission to take enforcement action in the meantime.

Thank you in advance for your assistance on this important issue. I look forward to your response.

Sincerely,

Brian Higgins
Member of Congress

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